Socially Just, Sustainable and Dynamic Growth for a Good Society: a Case Study for Korea Lee Joung-Woo, Kim Ky-Won, Kim Ho-Gyun and Cho Young-Tak November 2012

ECONOMY OF TOMORROW

Socially Just, Sustainable and Dynamic Growth

for a Good Society:

A Case Study for Korea

Lee Joung-Woo, Kim Ky-Won, Kim Ho-Gyun and Cho Young-Tak November 2012

■ South Korea had experienced a high rate of growth since the 1960s under the developmentally-oriented

military dictatorship. This regime pursued a growth-first, outward-looking,

government-driven and conglomerate-favoring strategy. Along with its positive effects of

high growth and economic modernization, it had negative effects of imbalance, instability

and political oppression as well.

■ The financial crisis in 1997 hit the Korean economy severely. On the one hand, the crisis

was caused by the hastily implemented opening-up of the capital market. On the other

hand, it resulted from the structural defects of family-owned conglomerates and the financial

system. Since then Korea has come to terms with a lowered growth rate. The aggregate

demand structure was transformed as well. The proportion of export and government

expenditure has surged, whereas those of private consumption and investment has fallen.

■ Korea has spent too little on a social safety net for dealing with those who suffer from

poverty caused by unemployment and old age. Furthermore, insufficiency of welfare goods

such as education, healthcare and housing aggravates the unequal income distribution

among people. Inequality is on the rise, which is also due to the increase of contingent

workers. There exists extreme discrimination between regular and contingent workers, not

only in pay, but also in labor conditions, job security and promotion. To make matters worse,

this insider-outsider division originates from organization power and luck rather than from

labor productivity.

■ The Korean growth model in the past 40 years has depended primarily on boosting exports

and the increasing development of high-tech products. This has contributed greatly to

overall development and modernization. At the same...